Bollinger Bands Binary Options Trading Strategy

One of the simplest, but at the same time effective strategies for binary options is TS “Bollinger Lines”. Its advantages include easy chart analysis: the corresponding indicator (Bollinger Bands) is classic and can be easily turned on in the settings. Despite the simplicity of turning on and adjusting, the study of lines allows traders with a sufficient degree of probability to determine the further development of the trend and acquire either call- or put-options with a win for themselves.

Where to find the indicator?

We open the page with a live schedule. Click on the Indicators icon and select Bollinger Bands.

setting bollinger bands on a chart
setting bollinger bands on a chart

The indicator consists of three lines: resistance, support and moving average. The upper and lower lines form a corridor within which the value of the asset changes.

How to use Bollinger Lines?

But for the trader, the main thing is not to find the volatility corridor, but to predict the change in the price of the asset, that is, correctly determine the entry time. And this technical indicator can help with this. A trend change is observed after a significant contraction of the corridor. That is, while the corridor is wide, the investor is invited to wait with the acquisition of the option.

The theory says that after a strong compression of the price corridor, a surge will necessarily occur. Catching him is the main task of the trader. It is also important to track the movement of prices relative to the support and resistance lines. As a rule, a breakout of the volatility corridor is extremely rare. That is, the price “bounces” from the upper or lower line.

Therefore, the optimal conditions for entry is a narrow corridor while the price reaches the upper or lower border. Then she will change the direction of movement to the opposite, and in explosive order.

trading signals of the bollinger bands on the chart
trading signals of the bollinger bands on the chart

The “Bollinger line” strategy for binary options allows you to some extent manage risks. The deal is the more reliable the narrower the corridor. Accordingly, with high volatility, risks are also high. Although many experts believe that even in this case, the risks are often justified – this vehicle is so reliable.

Graph changes

In any graphical models, the slightest change in the figures can prompt the experienced trader to further develop the price of the asset. In the case of the “Bollinger line” strategy for binary options, the following rules are most important:

• If the price began to move, then it will tend to reach the opposite line (from the support line – up, from the resistance line – down);

• When a corridor breakthrough is observed with three or four peaks, therefore, a price pullback can be expected;

• The narrowing of the corridor predicts sharp price changes.

buy and sell options signals Bollinger line
buy and sell options signals Bollinger line

All this can be used by the trader to purchase put or call options, depending on the situation unfolding in the market.

The advantages of this strategy are often attributed to its simplicity, which allows even beginner players to apply the Bollinger lines. However, the trader’s experience is important for the correct reading of the chart. As a rule, over time, an investor better understands its laws and can more effectively interpret data obtained using technical indicators.

Novice traders should apply as many strategies as possible. The search for graphic patterns makes it more likely to predict a trend reversal, fall or, conversely, a price surge. These include not only Bollinger lines, but also other figures (for example, doji figures or triangles). It is also recommended to combine trading strategies with cost management strategies. Effective distribution of the deposit is an integral part of the activities of every successful investor.

Bonus: Double Bollinger Trading strategy